Relief to Wipro: ITAT Quashes Order of AO Disallowing Interest Expenditure and Orders Re-computation of Deduction u/s 10AA of Income Tax Act [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) to delete the disallowance under Section 115BBD of the Income Tax Act, 1961 and to recompute the deduction allowable to the assessee under Section 10AA of the Income Tax Act.

The assessee M/s. Wipro Limited filed his return of income  declaring at income of Rs. 57,51,34,75,210/after claiming deduction under section 80G of Income Tax Act of Rs. 4,05,98,408 and 80IAB of Rs. 585,09,09,819.

During the Scrutiny assessment, the assessee claimed exemption under Section 10AA of the Income Tax Act being profit of SEZ (Special Economic Zones) units which was disallowed by the AO. The A.O. took the view that the interest expenditure claimed by the assessee on the ECB loan is not allowable as deduction under Section 115 BBD of the Income Tax Act.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (appeals) which upheld the decision of the AO. The assessee filed an appeal before the ITAT.

The Authorised Representative (AR) contended that the assessee submitted that the undertaking is eligible for deduction under Section 10AA Income Tax Act, therefore the deduction should be allowed on the enhanced profit of the eligible undertakings.

It was also submitted that the provisions of section 115BBD of the Income Tax Act  attracts only if the total income of the assessee “includes any income by way of dividend” declared, distributed or paid by a specified foreign company. Thus the A.O. was not justified in invoking the provisions of Section 115BBD of the Income Tax Act.

The Departmental Representative relied on the decision of lower authorities

The Bench comprising of Beena Pillai, Judicial Member and Laxmi Prasad Sahu, Accountant Member set aside the order passed by AO on this issue and direct him to compute deduction under Section 10AA of the Income Tax Act.

Further, the A.O. was not justified in invoking the provisions of Section115BBD of the Income Tax Act for making the impugned disallowance, accordingly directed the AO to delete the disallowance under Section 115BBD of the Income Tax Act.

Hence, the appeal of the assessee is allowed.

To Read the full text of the Order CLICK HERE

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